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What is Manufacturing 4.0 and How Will It Impact My Employees—and Leaders?

By Jill George, Ph.D.

Manufacturing is continuing to change faster than you can innovate. You’re running hard to just keep pace with digitization, automation, expansion, and shifts in customer demand and employee demographics—the megatrends collectively known as Manufacturing 4.0.

Often interchanged with Industry 4.0, a term coined at a conference in Hanover, Germany, a few years ago, or Smart Manufacturing, the use of sensors and digital transfer of data, the Manufacturing 4.0 paradigm comprises major technological innovations including advanced robotics, IoT (Internet of Things), sensors, mobile services, 3-D printing, and data analytics.

Experts in the field started using Manufacturing 4.0 to make the term more specific to the manufacturing industry, which is the cradle of these technological advances. In sum, if you add the technological innovations, the changes in global middle-class demand, shifting markets, and the demographics of the workplace, what we have before us is the industrial revolution of our lifetime.

When I first learned of Manufacturing 4.0, I was astonished to realize what an amazing time we live in, given the global enormity of the revolutionary possibilities Manufacturing 4.0 will unlock. A colleague of mine had a quite different reaction. She said that realizing all the changes that would have to take place to people’s jobs given Manufacturing 4.0 is extremely overwhelming for her. True enough—the amount of change going on now, and on the way, is staggering.

"Manufacturing is continuing to change faster than you can innovate."

Companies now have the power to track the production process from start to finish, resulting in real-time feedback about product status, material availability, equipment maintenance, etc. For example, your car will be able to use navigation to identify that you frequently go to Starbucks and then offer you a coupon. Your car battery will send information to your dealer that your battery is low and the dealer can have the parts you need before you arrive.

As a result of these megatrends, the next 10 years will see greater change than was seen in the last half-century—much of which could undermine substantial gains gleaned from lean. Ironically, it will be the engineering advances driven by today’s manufacturing leadership that will cause this backslide. Why? Two reasons:

First, companies mistake continuous improvement efforts for the radical level of innovation required to meet the challenges of Manufacturing 4.0. This is akin to focusing exclusively on improving a rail system, but missing the fact that competitors have moved on to air travel.

Second, many organizations are preparing Manufacturing 4.0 strategies focused on digitization (of operations, process, and product redesign) and customer demand, while failing to recognize the role people play in linking the two. They overlook critical skill gaps that threaten customer connectivity by breaking the relationship between product innovation and need. From the factory floor to the C-suite, manufacturers are missing people with the mindsets, skill sets, and readiness levels to cope with the gargantuan leaps forward in engineering and production. On the line, for example, we already see workers being driven further away from the production process. Yes, hands-on tasks still exist but, increasingly, most of the heavy lifting is being performed by minds, not muscle.

How Manufacturing 4.0 affects your workers

New, future-looking Manufacturing 4.0 skill sets must evolve as quickly as your engineering and design innovations, and your customers’ buying preferences. Lean manufacturing tools that address only the challenges of the moment won’t compensate for the shift in required skills.

The table below illustrates how workers will need to transition to meet Manufacturing 4.0 challenges.

Shifting requirements for manufacturing workers

Past requirements for workers

Present/Future requirements for workers

Experience

Ability to learn

Physical capability

Mental muscle, ability to adapt quickly to changing roles

Mechanical aptitude

Digital and team-collaboration aptitude

Existing knowledge, basic education

Higher-level education, continuous learning

Single-process motivation

Motivation to work in a team across multiple processes

Detailed assembly tasks

Manufacturing process monitoring

Willingness to follow instructions, with occasional contributions to process improvements

Willingness to own the line and assume responsibility for meeting production and quality goals, and constant improvement

Manual data tracking

Real-time data usage

How Manufacturing 4.0 affects your leaders

What is less-in-your-face apparent is that the gap between leadership skills and ever-evolving production systems is widening. Without relevant, updated skill sets, leaders tend to break ranks and improvise when it comes to how they engage the workforce, drive results, and meet customer needs. This variance in leadership performance lowers production quality and raises costs. It’s little wonder that only 37 percent of manufacturing leaders rate their overall leader quality as “high” according to the Global Leadership Forecast 2014|2015, conducted by DDI and The Conference Board.

So, how likely is it that Manufacturing 4.0 (referenced as M4.0 in the figure below) will change leaders’ jobs? In a recent poll by the Manufacturing Leadership Council, 90 percent of respondents agreed that leaders’ skills would change significantly.

Which skills will be needed by Manufacturing 4.0 leaders?

According to hundreds of manufacturing leaders we interviewed around the globe, new or enhanced digital, engagement, interpersonal, change, navigation, decision-making, and customer experience skills top the list of skills required of leaders for Manufacturing 4.0.

At all levels, leaders will need to:

Think horizontally, across the enterprise

Bring engagement to a new level

Drive customer-connectivity

Innovate and motivate

Adopt extreme lean principles

Connect the dots amongst piles of available data

While these findings are cause for concern, they also scream “opportunity” for those organizations that understand that plant performance, regardless of technology, is ultimately a function of the quality of their leadership and workforce.

Knowing that it will take dedication and commitment to achieve the kind of transformation that will put your organization on top of the Manufacturing 4.0 movement, we’ve just released a how-to guide that walks readers through four major talent strategies for Manufacturing 4.0. A Leader’s Guide to Manufacturing 4.0 dives into strategies that need to be addressed by both executives and HR as we swiftly move into this new era.

Jill George, Ph.D., is DDI's Global Auto/Manufacturing Practice Leader where she is responsible for strategies that increase her clients’ competitive edge. Over her 29 years of internal and consulting experience, she has been inside manufacturing sites all over North America, Europe, and China. Her team spearheads thought leadership and solutions to transform production teams, first-line leaders, mid-level, and executive talent. ​Blurring the lines between work and family, Jill’s children are learning leadership skills at the dinner table and on the practice field.

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